The surge in popularity of independently developed games has opened up new creative possibilities. The advent of new digital distribution venues provides plenty of new outlets for these developers to get their games out to a wide market. However, this has also had the side effect of leaving a lot of these individuals and studios unable to make a profit.

While people are beginning to realize marketing is relevant, price is a vital part of the equation, too. The right price point will attract buyers, but still allow the creators to make money. It's a tricky balancing act that can be a daunting task. And when you factor in the variables inherent to each different platform indie games pop up on these days, the balancing act gets even more difficult.

Planet of the Apps

The iPhone has become one of the most popular outlets for independent developers in recent years. With a low barrier to entry and great flexibility, it seems like a perfect fit for small, up-and-coming studios.

But the nature of consumers on the app store means that it can often be difficult to make a profit or even break even when releasing a game on Apple's mobile device.

"The push to 99 cents is the single most frustrating and terrible thing about App Store pricing," says Nathan Vella, co-founder of Toronto-based Capybara Games (Critter Crunch).

"Since it became 'expected' by consumers, it forces a lot of developers, specifically indies, to devalue their game and significantly increase the number of sales needed for developers to get back their investment."

Capybara's Critter Crunch, which was released on the iPhone in June of last year, currently sells for $1.99. And Vella says that if more developers stay away from the 99 cent model, the App Store will become a better environment for indie developers because it could potentially change the way consumers view the value of games.

"I always use Canabalt as my example -- that game is 100 percent worth $2.99," he says. "Adam Saltsman bucked the trend and priced his game at a level he thought was fair. We're on board with what Adam is doing -- not letting the 99 cent pressure define how you price your game. Rather, just price it fairly. Having control of your pricing is great -- being able to define, at a fine level, what your game is worth is something you often don't get control over."

Canabalt

It's also important to realize the platform you're developing for and to budget accordingly.

"You need to be smart on the production side to not spend a fortune making a game," Vella says. "That way you break even at a good number of sales, and maybe even start profiting. Huge teams and giant-sized epics are super risky (on the iPhone), since it's so tough to tell if a game's going to hit and make back its costs.

"The other key thing is making a quality game," says Vella. "While quality doesn't assure you financial success by any means, making a garbage game pretty much ensures you won't have financial success. So, the best thing you can do aside from being smart in your production is make sure the game you put out hits a certain quality bar."

Flying Free

Of course, not everyone has the same mentality when it comes to developing games for the iPhone. After experimenting with various payment options, prominent iPhone developer ngmoco has settled on a free-to-play model for its new titles.

"We made this decision after a year of developing and publishing games that were priced from free to $9.99, and evaluating the pricing erosion in the App Store, and the behavior of players in other areas of their entertainment mix -- like social networks," says ngmoco's VP of marketing, Clive Downie. Two of the developer's most recent titles, Eliminate and Touch Pets Dogs, are free to download but offer for-pay features.

"Consumers have reacted well," says Downie, of the move to free-to-play. "You can't make everyone happy all of the time, so this approach doesn't suit everyone.

"But it's important to say that it suits most people and we think in the future it will suit more people. The consumption behavior of players now and in the future is changing based on their habits.

"An example is right there alongside the App Store," says Downie. "iTunes would only be selling albums at $9.99 and above in another world where consumers didn't want to pay for specifically what they wanted to consume. But it sells singles for $0.99 to cater to choice.

"We're taking it one step further. The game is free. If you want to achieve more and use the game as one of your regular entertainment outlets you can pay more."

Traditionally, free games have been viewed as being of lesser quality then their for-pay counterparts, but as Downie explains, the nature of the App Store has changed this perception for many consumers. Free-to-play games have shifted up in quality, argues Downie.

And there's more to it, he says. "Consumers expect optionality. Time is restrictive and there's so much more to do with it that, by providing choice at a price, if you have a good game at the center, you can receive returns that are comparable or more than just asking for a one-off purchase. A one-off purchase that actually will result in the majority of consumers never experiencing all of what they've paid for.

"Both Touch Pets Dogs and Eliminate are very sophisticated games that take this approach. They are designed like premium games, have the quality of premium games -- but are free-to-play and allow players to consume at their pace."

Touch Pets Dogs

Prior to moving towards the free-to-play model, ngmoco made use of the flexibility of App Store pricing to test out various methods of selling its games by judging the reactions of consumers.

For example, when the company released Rolando 2: Quest for the Golden Circus, it originally planned to discontinue the game's well-received predecessor to help boost sales for the sequel. However, the decision to remove the game was changed just one day later, after numerous fans voiced their displeasure. This sort of instant feedback, especially with regards to price changes, is one of the major benefits of the App Store.

"Price changes on iPhone games result in increased downloads, that's for certain," Downie says. "But the amount of volume change and for how long that continues is a function of a series of factors.

"Timing is the crucial factor. Best to drop price when the app is still fresh and there's a large amount of latent need for the game -- so when the price is dropped there's a release valve against that need, and the downloads are high, and [that's] enough to propel the app into a high chart position where organic downloads happen."

A Flexible Console

Capybara found a similar level of freedom when it released an upgraded version of Critter Crunch as a downloadable title on the PlayStation Network this past October. The game was sold for $6.99, a unique price on a platform where smaller titles are generally sold for five dollars or under, and bigger games typically cost $10 and up.

"We consulted with SCEA about our price point, and they were extremely helpful. But in the end it was Capy's call. And we made the decision to price it at $6.99 for a couple of reasons," says Vella.

"To make my first point, I am gonna fall back on the food analogy I've been using... Some games, we'll call them 'meal games', leave you full when you finish playing them. A game like Flower leaves me feeling so satisfied that I don't really want to play anything else after. Other games are more like snacks, that you play in short bursts around meal games. For example, Noby Noby Boy is a wonderful snack game. When you are done, you feel good, but you could easily segue into another meal-sized game soon after."

"With Critter Crunch, we set out to create something in-between -- a size of game that's more akin to a large appetizer. Something that, depending on your gaming mood, can satisfy or leave you open to more gaming as you choose. When we looked at this, meal games are comfortably priced at $10 and up, and snack games are priced at five dollars or less. We wanted Critter Crunch in between the two. We had also seen Shatter, which is another great large appetizer game, break the mold with the $7.99 price point."

"Secondly, we had our eyes wide open about our situation: launching an original, and relatively unknown, game in the puzzle genre on PSN is surely not perfect. We knew we weren't PopCap, with tons of existing knowledge of our product or our studio. So with the goal of drastically reducing barriers for people to get into the game, we thought a nice low price point might help. We really just wanted as many people as possible to both play Critter Crunch, and see what Capy was able to do as a developer."

Out of Your Hands

But while PSN is fairly flexible, giving developers a lot of freedom with deciding at what price point they want to sell their game, Microsoft's Xbox Live Arcade is much more rigid. Though, according to Michael Wilford, CEO of Twisted Pixel Games, this isn't necessarily a bad thing.

"Xbox Live Arcade games are priced by Microsoft," Wilford explained. "We get to make a suggestion, but ultimately it's their call. When making our suggestions, we mainly consider the amount of content on offer relative to other comparable games. We try very hard to offer more content than is expected for a given price point, and so far we feel like we've done a pretty good job, especially considering the free gamerpics, premium themes, and avatar awards we give to our players."

According to Wilford, putting the pricing decision in the hands of Microsoft can be "a good thing given their knowledge of the unreleased portfolio."

Both of Twisted Pixel's games, The Maw and Splosion Man, were priced at 800 Microsoft Points, the equivalent of $10. However, Wilford doesn't believe that this has put the developer in a box, forced to release only $10 games in the future.

"I don't think the majority of our audience knows or cares what we priced our previous games at," he explained. "And the ones that do have a positive attitude towards us and know that our goal is to one-up ourselves with every game we make.

"I think, and hope, that we've earned their trust enough that if we released a $15 game, or even a $20 game, there would be a high expectation of quality, and a high degree of faith that we would continue to over-deliver."

And in the digital space, where potential customers are often much more fickle, finding the right balance between paying the bills and not being over-priced can be tough to find.

"As your price goes up, you start losing potential buyers, so you can't just assume a higher price will yield more revenue -- you need to figure out if that buyer drop-off is proportional to the price increase or not," Wilford says. "And sometimes, even if you think a higher price point will be more profitable, it may be best to go lower anyway in order to get a bigger group of people playing your games, recognizing your brand, and remembering your name."

Vella agrees, saying "For us, it's a combination of what we feel the game is worth, and what we feel is fair to gamers. For example, pricing Critter Crunch at $15 just wouldn't feel right to us, and I don't think it would be fair to gamers. I think some games, many of them retail, are overvalued and overpriced.

"And on the flip side, I think there's a push on the iPhone side to undervalue and under-price. Pricing isn't easy, it isn't really fun, and there are so many repercussions that it sort of makes your brain bleed. In the end, we just try to make decisions that best serve our studio and try to be as fair as possible for gamers."

Critter Crunch

One of the most important things is to understand what you're getting into in the early stages of production, so that you can get an idea of how much to charge for a title even before it's finished.

"We started prototyping knowing that, while everything else may change, we are not aiming for a really big game," Vella said of Capybara's upcoming WiiWare title Heartbeat. "That knowledge helps us get an approximate price, so we can figure out, internally, how best to budget the development -- where we break even, those sort of business-related calculations that you have to do for every game."

In Conclusion

While there seems to be little consensus on how to price a game, speaking to Vella, Downie, and Wilford has revealed a few universal truths when it comes to putting a price tag on an independent, digitally released game.

1. Know what you're getting into. Though you may not settle on a price until the very end, it's important to think about a range early on in the development process. Factors like platform choice and the scope of the project are important things to consider and allow you to budget accordingly, and should have a strong affect on the final pricing decision.

2. Be Fair. Whether it's a free-to-play iPhone game or a $10 XBLA title, keeping your price in line with what consumers expect is vital. Not only will it ensure more buyers of that particular game, but it creates goodwill and a consumer who knows they won't get ripped off with your next title.

3. Stay Flexible. One of the benefits of a digital release is that it allows for flexibility in terms of pricing, discounting certain platforms. If you have the ability to experiment with price, do so, and pay attention, as it will teach you a great deal about how consumers react to different price points.

Settling on a profitable price is neither easy nor fun, but for independent developers it's crucial. Being prepared, doing your research, and listening to consumers can alleviate the frustration that is generally associated with the experience and make pricing less painful.